Tuesday, 8 December 2015

Nigeria will focus on
cutting the cost of running the government rather than on slashing jobs next
year, and will present its 2016 budget proposals by the end of the year, the
new finance minister, Mrs. Kemi Adeosun,
told Reuters on Monday.

Widespread corruption and mismanagement
have stunted development in Africa’s biggest economy and left it with paltry
savings, dangerously pot-holed highways and constant power outages after a
period of record high oil prices.

The new minister, who was
appointed at the start of November, has launched an Efficiency Unit based on a
UK model aimed at pinpointing spending excesses and imposing guidelines in an
effort to cut the vast amount of waste.

“We’re spending
currently more on overhead than we are on capital, so that’s unsustainable and
we don’t have the revenues that we had,” Mrs.
Adeosun said in an interview. “We don’t want to slash
staff…because this is a government that is committed to job creation, so the
obvious area to look for savings is overhead.”

While it was unclear how
much savings the government could make, she said the Efficiency Unit would end
chronic discrepancies among government bodies including 50,000 naira cost
swings on ink cartridges and flight prices to one destination that varied by as
much as 100 percent.

“As long as the housekeeping isn’t good, then we’re
unlikely to succeed with anything that we do, so we see this as very
fundamental,” she said.

OPEC member Nigeria is
reeling from the crash in global oil prices that has halved the value of its
oil sales, which provide about 70 percent of government revenues even though
the sector accounts for less than 10 percent of total real GDP.

Alongside the effort to
streamline spending, the minister wants to make sure existing revenues actually
make it into the government coffers such as from passports, exam fees and
university tuition.

“So if we make
sure all the revenues come in…then oil becomes the icing on the cake and we can
say ‘OK, we want to do bridges, we want to do power, housing’,” Mr. Adeosun said.

A government document seen
by Reuters earlier this month outlined a plan for a 7-8 trillion naira budget
for next year, well up from 4.5 trillion naira in 2015. Nigeria is in dire need
of infrastructure investment that the new government hopes to address with a
separate $25 billion fund.

Most of its roads, railways
and power facilities are either in disrepair, half-built or with a capacity
that is far below the country’s needs. Reinvigorating the depressed non-oil
sectors, such agriculture, mining and manufacturing, as President Muhammadu Buhari badly wants will depend on how
successful these structural problems are dealt with.

Capex accounted for just
556.9 billion naira for this year, but there was no release of capital
expenditure money until the end of September, when about 139 billion naira
allocated for the first quarter was finally released.

Construction companies with
government contracts have laid off tens of thousands of workers since payments
began drying up in the fourth quarter last year, with the fall in oil prices
and an expensive election year looming.

Mrs. Adeosun said the
budget figures were still being worked on but that a medium-term framework that
will serve as a base for the 2016 budget would be out soon. She did not comment
on whether the fuel subsidy, a lead weight on the nation’s purse, would be
removed. Many analysts believe that the current low oil price would be an ideal
time to cut it without hitting the population too hard. (guardian)

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